Positive Outlook for CarMax: Strong Sales Growth and Financial Performance Drive Buy Rating

William Blair analyst Sharon Zackfia has reiterated their bullish stance on KMX stock, giving a Buy rating on May 28.

Sharon Zackfia has given her Buy rating due to a combination of factors that suggest a positive outlook for CarMax. The company is experiencing a second consecutive quarter of accelerating comparable sales, with used unit comps expected to rise by approximately 6.5%. This growth marks the strongest performance in used unit comps since the third quarter of 2021, indicating a robust recovery in sales.
Additionally, Zackfia anticipates a modest increase in first-quarter revenue, despite a slight decline in retail average selling prices. The expected rise in revenue is supported by a projected increase in wholesale sales. Furthermore, CarMax is likely to achieve a higher-than-consensus earnings per share, driven by strong retail gross profit per unit and income from its CarMax Auto Finance segment. The anticipated decrease in selling, general, and administrative expenses as a percentage of gross profit further strengthens the company’s financial position, contributing to the Buy rating.

In another report released on May 28, Evercore ISI also maintained a Buy rating on the stock with a $84.00 price target.